Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of James Crandell – Barclays Capital.
James Crandell – Barclays Capital
Can you talk about the trend in international margins from here? I thought you said the pricing may have bottomed and/or the pricing moves are behind you and maybe if you could comment on what you think is the trend in margins over the next few quarters internationally?
Bernard Duroc-Danner
It is a complicated issue because we have so many different markets and so many different contracts. We do the best job we can to measure analytically where pricing has occurred, why it has occurred and what is the timing for any kind of other pricing changes. Because of that analysis, which is about as real-time as you could have, we have come to the conclusion there is about more than 2/3 of our business or maybe 70% of our business in international markets which has been in one way or another, either mechanically or by negotiation or simply new business re-priced and the remaining 30-35% of our business is not likely to be repriced in 2009 and therefore by the time it gets repriced we think the positions may be different. So it strikes us that by and large the pricing effect on the international markets, with a few exceptions?there are always exceptions, is behind us.
That is statement one. Two, in general I think the market is red hot. Not at all. The tone is decent in the international markets. The tone is better which is also an environment which is less conducive to major pricing concessions. So between the analytical work and the tone, we are reasonably confident that pricing changes at least insofar as Weatherford is concerned, are behind us.
James Crandell – Barclays Capital
My second question has to do with the domestic market. I think it is no surprise that stimulation prices have collapsed but the magnitude of the drops in wire line and directional I’m sure were a big reason behind your poor results in North America. Can you comment on the weakness of that and are these 40-60% average price declines you have seen since the peak of the market the new reality of the market going forward?
Bernard Duroc-Danner
I think that my observation and I will also ask Andy to share his thoughts. My observation is that it seems that in North America there is no place to hide. Pricing was under severe pressure just about everywhere I can think about. To that degree, I think product lines like artificial lift, for example, had less pricing. Completion had less pricing. Anything that was drilling related was heavily pressured by clients. Andy you might want to add to that.
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